Leveraging social grouping for trust building in foreign electronic commerce firms: An exploratory study☆
Highlights
► We propose in-grouping strategies for foreign e-commerce firms to build initial trust and examine their effectiveness. ► Strategies providing common-bond information are more effective to in-group a foreign online store to build trust than strategies providing common-identity information. ► While foreign customer review is viewed as out-group endorsement, providing common-bond or common-identity information can make it a useful strategy to build trust. ► Institutional-identity strategy of showing local cultural activities is also effective in in-grouping the foreign online store to build trust.
Introduction
Due to the globalization of the Internet and the rapid development of electronic commerce (e-commerce), a number of companies are seeking to explore new markets even as they are subject to increasingly intense market competition. For example, many multinational e-commerce firms are attracted to China because of its fast-growing economy and huge market potential (eBay.com, Yahoo.com, Amazon.com, etc.). Although some have succeeded, many have failed and suffered significant financial losses, such as eBay China. Studying the failure of eBay China (www.ebay.com.cn), researchers found that the eBay (China) website simply replicated the international eBay website. Although it featured the respective local language and contents (Ou and Davison, 2009, Ye et al., 2008), there was no significant adaptation to the context of China. Trust issues are a significant challenge for foreign companies as customers most likely will not view them as an indigenous platform. In a 2010 Business Leader Forum, the speaker, Vice-President of a prominent Chinese online travel agency, attributed such challenges to a lack of “grassroots spirit” amongst these less successful foreign ventures. Foreign companies are less likely to be embraced by a community if they do not understand local norms and culture. As a result, it is important for foreign e-commerce firms to indicate their sincerity to do business locally by being integrated into the local culture.
When foreign firms set up websites to explore new markets in different countries, initial trust building is fundamental to their success (Choi and Geistfeld, 2004, Jarvenpaa et al., 1999). Replicating the original website by simply using the local language is not enough to build trust in foreign online stores (McKnight et al., 1998, Zucker et al., 1996). Without integrating local in-group features, local consumers would view such foreign firms as out-group entities that lack social similarity (Zourrig, Chebat, Toffoli, & Medina-Borja, 2010). The social categorization of in-group and out-group based on social similarity and psychological distance is rooted in Social Identity Theory (SIT) (Tajfel & Turner, 1979). People usually behave more favorably to in-groups (e.g., local peers, friends) than out-groups (e.g., foreigners, foreign organizations), especially in collectivistic cultures (Doney et al., 1998, Lee and Ward, 1998, Triandis, 1972). While similarity refers to matching attitudes, values, interests, and personality between people, social similarity emphasizes similarity based on social structure and organized social activities, such as relatives, friends, classmates (Turner & Onorato, 1999). A higher level of social similarity brings closer psychological distance. In this study, psychological distance refers to the social psychological distance-how distinct is the social target from the perceiver's self (Bar-Anan, Liberman, & Trope, 2006). A critical question that arises is whether the out-group foreign online stores can be converted into in-groups via social-grouping strategies to build trust. Social network media could provide such an opportunity for foreign companies to build social ties using socially similar cues in their grassroots campaigns. For example, more and more organizations set up their profiles in social network sites, such as Facebook.com or Renren.com (the most popular social network site in China), to foster an attachment with potential customers. There could be enormous potential for foreign companies to exploit the power of social networks to build trust and boost their sales and performance (Winer, 2009). Thus, this exploratory study will investigate the question:
Can businesses leverage social similarity or ties to help build initial trust in new foreign online stores?
By including local elements to build trust, a foreign online store could become part of customers’ social in-groups. Based on Social Identity Theory and Trust Transference Theory, this study proposes trust-building strategies for foreign online stores that leverage social grouping and social ties. The effectiveness of these strategies to build trust will be compared and ranked in a survey. This exploratory study has implications for how businesses could leverage social networks and social ties to build customers’ initial trust toward a foreign online shopping website. Social-grouping strategies could be one of the important factors for new online firms to consider to boost sales performance.
Section snippets
Theoretical background and research propositions
There has been much discussion of multinational firms’ cross-cultural investment successes and losses. For example, while companies such as WalMart and P&G were able to successfully expand their businesses in China, researchers found that the e-commerce market is especially tough for foreign firms, based on a comparative case study of taobao.com and eBay China (Ye et al., 2008). In fact, eBay is not the only international IT giant that experienced difficulties in entering the Chinese e-commerce
Methodology
This study was conducted in China because of its collectivistic cultural context, where people have a greater tendency to distinguish between in-group and out-group members. This will allow us to better gauge the effectiveness of in-grouping strategies to build trust. We use a hypothetical Internet firm, iBook, an American-based online bookstore that is expanding its business to China.
In the study, three steps were used to operationalize the in-grouping strategies. In the first step, based on
Data analysis results
A total of 63 students participated in the survey; 65% of the respondents were males. On average, all respondents had 8 years’ experience in using the Internet, with 40.78 h per week. They all had experience with online shopping, averaging 15 times per year.
Table 4 shows the descriptive statistics of ranking the five versions of the iBook website. In order to understand the significant difference between each iBook version, the Wilcoxon signed-rank test was conducted to further analyze the data.
Discussion
This study investigated the effectiveness of various in-grouping strategies that foreign e-commerce firms can employ to build initial trust and compared their effectiveness. It demonstrates that it is possible to extend social identity with trust transference. The in-group and out-group gap can be bridged through various theoretical mechanisms, such as institutional-identity in-grouping, common-identity in-grouping, and common-bond in-grouping, with different levels of effectiveness.
Generally
Acknowledgements
For their research assistance, we would like to thank Jiapeng He, Jinbi Yang, Nan Wang and Jie Wei. The work described in this paper was partially supported by a Strategic Research Grant from the City University of Hong Kong [Project No. 7002627].
Yani Shi is a Ph.D. candidate majoring in Information Systems at the City University of Hong Kong, University of Science and Technology of China. Her research interests include electronic commerce, recommendation agent, and cross-cultural issues in use of information technology.
References (44)
- et al.
A cross-cultural investigation of consumer e-shopping adoption
Journal of Economic Psychology
(2004) - et al.
The impact of consumer trust on attitudinal loyalty and purchase intentions in B2C e-marketplaces: Intermediary trust vs. seller trust
International Journal of Information Management
(2011) - et al.
Understanding cultures and implicit leadership theories across the globe: An introduction to project GLOBE
Journal of World Business
(2002) New communications approaches in marketing: Issues and research directions
Journal of Interactive Marketing
(2009)- et al.
The association between psychological distance and construal level: Evidence from an implicit association test
Journal of Experimental Psychology: General
(2006) - et al.
Frictionless commerce? A comparison of Internet and conventional retailers
Management Science
(2000) eCommerce trust study
- et al.
Beyond trust: Web site design preferences across cultures
Journal of Global Information Management
(2005) - et al.
The impact of societal culture and industry on organizational culture: Theoretical explanations
Culture, Leadership, and Organizations, The Globe Study of 62 Societies
(2004) - et al.
Understanding the influence of national culture on the development of trust
Academy of Management Review
(1998)
Belief, attitude, intention and behaviour: An introduction to theory and research
Individualism and collectivism
Exploring the website features that can support online collaborative shopping
Culture, leadership and organizations: The GLOBE study of 62 societies
Consumer trust in an Internet store: A cross-cultural validation
Journal of Computer-Mediated Communication
Sociometric differentiation of the psychegroup and the sociogroup
Sociometry
Are you ready for “trust” economy
Computer World
The processes of causal attribution
American Psychologist
Social-networks connect services
Computer
Trust and distrust in organizations: Emerging perspectives, enduring questions
Annual Review of Psychology
Ethnicity, idiocentrism–allocentrism, and intergroup attitudes
Journal of Applied Social Psychology
Cited by (27)
Understanding the drivers of online trust and intention to buy on a website: An emerging market perspective
2022, International Journal of Information Management Data InsightsHow to retain customers: Understanding the role of trust in live streaming commerce with a socio-technical perspective
2022, Computers in Human BehaviorCitation Excerpt :H6b: Visibility affordance positively influences trust in the products. Based on trust transfer theory, trust in one entity can be transferred to a relatively unknown person/entity through their association (Lim et al., 2006; Shi et al., 2013). In the context of live shopping, trust toward products can be generated via interpersonal trust because of their associations for several reasons.
Understanding trust in ms-commerce: The roles of reported experience, linguistic style, profile photo, emotional, and cognitive trust
2021, Information and ManagementCitation Excerpt :Trust may be shifted from divergent origins (e.g. individual or perspective) through the cognitive or communication process [86]. For instance, communal trust within community members may be shifted to trust in the cyber community [84,89]. In e-commerce and marketing studies, scholars have mostly focused on two streams of trust transference (i.e. inter-channel and intra-channel) [90].
Investigating individual trust in semi-virtual collaboration of multicultural and unicultural teams
2016, Computers in Human BehaviorConsumers' decisions in social commerce context: An empirical investigation
2015, Decision Support SystemsCitation Excerpt :In this study, we thus adopt a relational view from the two types of relationship and employ the commitment-trust theory to further understand the determinants of social shopping and social sharing intention. Trust transfer occurs when the trust in a known person/entity can be shifted to another relatively unknown person/entity through the associations between them [23,24]. The theoretical basis for trust transference is derived from the attribution theory [25], which helps individuals to make attribution of an event based on the inference drawn from the existing knowledge.
Identifying effective influencers based on trust for electronic word-of-mouth marketing: A domain-aware approach
2015, Information SciencesCitation Excerpt :There is a significant relationship between trust and a willingness to accept decisions when a strong identity-relevant tie exists between an individual and a group. Social-grouping strategies for building trust can be attained by leveraging an individual’s social identity ties [29]. With the popularization of the Internet and e-commerce, social trust in OSNs has received considerable attention, particularly in OSNs based on eWOM via consumer reviews [3,7,15,18,44].
Yani Shi is a Ph.D. candidate majoring in Information Systems at the City University of Hong Kong, University of Science and Technology of China. Her research interests include electronic commerce, recommendation agent, and cross-cultural issues in use of information technology.
Choon Ling Sia is a Professor at the City University of Hong Kong. He received his Ph.D. degree in Information Systems from the National University of Singapore. His research interests include electronic commerce, cross-cultural issues in use of information technology, knowledge management, distributed work arrangements, and computer-mediated communication. His research work has been published in MIS Quarterly, Information Systems Research, Journal of the Association for Information Systems, Journal of Management Information Systems, among others.
Huaping Chen is a Professor in School of Computer Science and Technology at University of Science and Technology of China. His research interests include information strategies, business intelligence and application
- ☆
An earlier, conceptual version of this paper has appeared in the Proceedings of the 2010 Ninth International Conference on Mobile Business, and cited in Theoretical Background and Research Hypotheses Section of this manuscript.